The Dutch Federation of Pension Funds (Pensioenfederatie) has called for policymakers to focus on creating a sufficient pipeline of investable projects rather than directing pension fund investment, as it set out its position ahead of a parliamentary debate on pensions on 10 September.

In a position paper submitted ahead of the House of Representatives committee debate, the federation highlighted pension fund investment, the operation of the new Dutch pension system, and communication around compensation for the abolition of the average contribution system as key areas for policymakers to consider.

On investment, Pensioenfederatie stressed that Dutch pension funds manage the deferred wages of millions of people with the primary objective of delivering the best possible pensions for current and future generations.

It argued that pension fund investment should be viewed over the long term, with funds continually balancing returns, risk, stability and costs rather than focusing on short-term performance.

According to the federation, around two-thirds of the eventual pension outcome is made possible by investment returns, with funds investing globally across equities, bonds, property and infrastructure.

The federation also acknowledged growing calls for pension funds to contribute to areas such as housing, defence, infrastructure, innovation and the energy transition, noting that funds have already invested in housing, infrastructure, sustainable energy and innovative companies for many years.

However, it warned that investment must fit within a fund's investment policy and offer an attractive return for members at an acceptable level of risk.

Pensioenfederatie said there was scope for pension funds to invest more in both the Netherlands and Europe, but argued that the main constraint was often not the availability of pension capital.

Instead, it identified a shortage of projects with sufficient scale, an attractive risk-return profile and predictable conditions as the key challenge.

It therefore called for stable and consistent government policy, a more integrated approach and greater use of public-private partnerships to increase the supply of investable opportunities.

“The discussion should not primarily be about what pension funds should invest in, but rather about how the conditions can be created under which societal projects become investable and profitable,” the federation argued.

The position paper also addressed the operation of the Netherlands' new pension system, highlighting that the focus has shifted from funding ratios towards individual pension capital within the new pension contracts.

The federation noted that the new system provided greater scope for positive investment returns to feed through to members and pensioners, adding that several funds had already used financial headroom during their transition to increase pension payments and accrued pension capital.

However, it emphasised that investment gains would not necessarily be reflected in pensions immediately, as funds could spread results over several years, allowing positive and negative outcomes to feed through more gradually.

Against this backdrop, it stressed the need for clear, understandable communication about changes in pension values, pension fund finances, and associated costs.

The federation also highlighted communication around compensation for the abolition of the average contribution system as a particular challenge during the transition.

It said a “substantial” compensation arrangement had been established for workers who could otherwise lose out from the move to the new system, particularly those aged between 40 and 55.

However, because compensation is linked to active participation in a pension arrangement at the point of transition, employees who change jobs, leave employment or otherwise cease active membership may receive only partial compensation or none at all.

Pensioenfederatie acknowledged that these circumstances could be “difficult and unpleasant” for individual members, but argued that there was no simple legal or administratively workable mechanism for providing tailored compensation retrospectively within the existing framework.

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